The pound depreciated to $1.623/£1 on Friday after Federal Reserve Chairman, Ben Bernanke failed to provide any direct indication that the U.S. economy would receive further liquidity. The pound also fell 1.4% versus the euro last week, its steepest drop in two months. This is largely due to concerns over the British economy's slow and anaemic growth. With further speculation that interest rates are likely to be left on hold until 2012, in addition to the UK needing another round of quantitative easing, market players are beginning to worry whether the UK can continue to with stand its austerity cuts.

In the Euro zone, the euro hit a low against the US$ of $1.4327/€1 after Bernanke's speech on Friday. Investors are worried over a second Greek bailout. However the euro regained ground yesterday against the Swiss franc trading more than 2% higher due to an increase in risk appetite. Monday's data showed Italian consumer confidence falling to the lowest in more that two years. This of course does not help the ongoing tensions in the Euro zone.

The US dollar made loses against the euro and yen on Friday after the long awaited speech by Federal Reserve Chairman, Ben Bernanke. He offered no details on how the central bank will encourage growth for the US economy and reported that the US economy grew by only 1% in the second quarter and that it was imperative for the country to reduce its high unemployment rate. Despite this, the US dollar regained significant ground yesterday as it rallied against the Swiss franc and yen. This was due to better than expected July consumer spending data and an increase in demand for US assets. This has reduced fears of a prospective US recession. On a less positive note, pending homes sales came in weaker than expected.

Elsewhere, high yield currencies such as the Australian dollar rallied significantly against the US dollar on Friday. The Japanese yen also made gains as investors returned to it as worries over the US and Europe increased. Yesterday, there was an increase in risk appetite on speculation the global economy will recover. The Aussie dollar reached its highest point this month in addition to appreciating against a number of its counterparts. The Australian dollar strengthened 0.4% versus the dollar whilst the New Zealand dollar rose 2% over the past week. It has also been one of the best performers in comparison to the other 10 developed nation currencies.

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